How Biweekly Mortgage Payments Work to Help You Pay It Off Faster

By Josh Patoka   Updated 05/05/2021 at 4:38 pm

If you’d rather pay less interest AND pay off your house faster, you’ll want to know about biweekly mortgage payments.

Biweekly mortgage payments are an easy way to save massive money on interest – without breaking the bank!

Especially since only making your standard house payment for 30 years can cost thousands of dollars in interest. (Sometimes double the purchase price of your home.)

What are biweekly mortgage payments?

With a biweekly mortgage payment, you pay half your payment every two weeks instead of one full mortgage payment monthly.

This is especially easy to do if you get paid every two weeks, since you can budget from each paycheck. Your “extra” paychecks that come twice a year can just be used like normal to send that half payment in.

By paying half your mortgage payment every two weeks, you end up making one full extra mortgage payment per year.

How do biweekly mortgage payments work?

For example, if you pay your mortgage on Fridays, every other Friday you’d make a half payment. (This means that if your monthly payment is $1,000, you make a half payment of $500 every other week.)

Most months, you’ll just make two payments that equal the amount of your current monthly payment. But two months out of the year, you’ll end up making an extra half payment.

This is because there are 52 weeks in a year, and biweekly means every two weeks. (Not twice a month.) Simple math (52/2) tells us that making a payment every two weeks means you will make 26 payments.

So instead of paying $12,000 a year as scheduled with a $1,000 monthly payment, you will pay $13,000 a year. Essentially you’ll be making one extra full mortgage payment each year.

And an extra mortgage payment each year can cut a surprising amount of interest off your loan.

Biweekly mortgage payments work by reducing the amount of interest you pay over time. If your lender allows them, this can speed up your overall repayment time too. So you’ll pay less money and get your house paid off faster.

Advantages of biweekly mortgage payments

Here are a few reasons you may enjoy making biweekly mortgage payments.

  • It’s typically set-it-and-forget it
  • Each payment is only half of a single monthly payment
  • It’s an easy way to automatically pay off your mortgage early

Biweekly payments can be a great option if you don’t have much extra money leftover after paying the bills each pay period and you still want to repay your mortgage early.

Too many people think the only way to make extra mortgage payments is to make your monthly payment and pay a large additional amount every single month. But that’s not true.

Even though you are still spending the same amount most months, the smaller biweekly payments can help you score quick mental victories like in the debt snowball method. And, smaller payments that better align with your paydays can also make it easier to plan how you will wisely spend your paycheck.

Biweekly mortgage payments can save you thousands of dollars!

Let’s see how making two extra payments each year can save you in interest payments on your mortgage.

If your mortgage principal is $200,000 at 4% for 30 years:

  • Monthly Payment (Principal and Interest): $954.83
  • Biweekly Payment (Principal and Interest): $477.42
  • Total Interest Saved: $22,533.31

Not only will you save over $20,000 in interest, which is enough to buy a new car, you will also pay your mortgage off  four years sooner!  That means four fewer years of monthly payments and more money in your wallet.

All you have to do is make two extra half payments each year!

To calculate how much you can save with biweekly payments, plug your mortgage payment information into a calculator. (If you’d like to see ALL of your interest information on all your debts — AND how fast you could be debt free, use the Pay Off Debt app.)

Tips for making the switch

The best way to schedule biweekly payments is to contact your mortgage lender. You might be able to make the change online with a few mouse clicks, or, you might have to call them and tell the representative you want to make a half payment every two weeks.

If your current monthly payment is $1,200, your new payment would be $600. A $700 monthly payment would be $350 on the biweekly schedule.

When switching payment frequencies, make sure you verify the following information:

  • There are no prepayment penalties or extra fees
  • Your bank no longer withdraw the lump-sum monthly payment in addition to the biweekly payments
  • Each payment is immediately applied to the accrued interest and principal. (Ideally you don’t want them to wait to apply the half payments until the regular due date.)
  • Never pay a third-party agency to switch your payments for you

Be sure you understand the terms of anything you sign up for from your lender.

For example, last I checked Wells Fargo’s biweekly mortgage payments plan (the “Preferred Payment Plan”) specifically says that “Payments made weekly, every two weeks and twice a month are treated as partial payments and may not be applied to your mortgage until full payment is received.”

So while setting up biweekly payments with them may make things more convenient, and will get you your extra mortgage payment each year, it’s not going to save you as much interest as having your half your payment applied early would. In that case, you may be better off sending in extra on your own twice a year and marking those payments “for principal only”.

What if your lender won’t allow biweekly mortgage payments?

Some lenders don’t accept biweekly payments.

If this is the case, your best option is to manually make the extra half payments twice a year. This will have the same effect as the biweekly payment option. If you mark those payments as going toward principal only, it’ll have a slightly bigger impact.

While most lenders no longer charge prepayment penalties, double check your lender’s policy as any fees can potentially negate the savings of additional payments.

Making biweekly mortgage payments can be a great repayment strategy

Biweekly mortgage payments can be a great early-repayment strategy. Most people will not realize they are making an extra payment twice a year because the payment amount is so small. For most months, you won’t pay any more than your current mortgage payment and you will still repay your mortgage early while saving thousands of dollars in interest. Plus, you might not have to make drastic changes to your spending habits!

If you want to pay off your house faster, biweekly mortgage payments can help you do it.

Leave a Reply

Your email address will not be published. Required fields are marked *